Economics for Manager Online MCQ Assignment Set 1

Online MCQ Assignment

This flash card is very useful for Online MCQ Assignment and must study for if you are student of distance learning program for amity, upes, imtcdl, smu or any others university/institute

QN1: The goods that can be substituted with each other are known as
a) Complementary goods
b) Competitive goods
c) Inferior goods
d) Veblen goods
Answer

Answer: a) Complementary goods

QN2: Law of demand state that
a) Price is inversely proportional to quantity demanded
b) Price is inversely proportional to 1/quantity demanded
c) Not related
d) None of the above
Answer

Answer: a) Price is inversely proportional to quantity demanded

QN3: Law of supply states that
a) Price is inversely proportional to supply
b) Price is inversely proportional to 1/suppy
c) Price and supply are constant
d) Price and supply are not related
Answer

Answer: c) Price and supply are constant

QN4: At equilibrium price
a) Quantity demanded> Quantity supplied
b) Quantity demanded< Quantity supplied
c) Quantity demanded is not equal to quantity supplied
d) Quantity demanded is equal to Quantity supplied
Answer

Answer: d) Quantity demanded is equal to Quantity supplied

QN5: Demand for a Quantity is perfectly inelastic when
a) When quantity demanded changes with price
b) When quantity does not change with price
c) Quantity demanded increases with decrease in price
d) Quantity demanded decreases with increase in price
Answer

Answer: a) When quantity demanded changes with price

QN6: Which of the following is the best example of the law of demand
a) As the price of fur coats decreases, more consumers will buy them.
b) As the price of fur coats increases, more consumers will buy them
c) As the price of fur coats decreases, people buy more wool jackets
d) As the price of fur coats increases, people buy more leather jackets
Answer

Answer: a) As the price of fur coats decreases, more consumers will buy them.

QN7: The price of an item drops 10% in such a way that the Price Elasticity of Demand of that item is unit-elastic. We would expect the quantity of the item demanded to
a) drop by 5%
b) stay the same
c) increase by 5%
d) increase by 10%
Answer

Answer: d) increase by 10%

QN8: Law of variable proportions is not based on which of the following assumptions:
a) Constant Technology
b) Homogeneous factor units
c) Short-Run
d) Factor proportions are constant
Answer

Answer: a) Constant Technology

QN9: Increasing returns to a scale refer to a situation when all factors of production are increased, output
a) Increases at a higher rate
b) Increases at a slower rate
c) Output remains the same
d) Is constant
Answer

Answer: a) Increases at a higher rate

QN10: The main cause of the operation of diminishing returns to scale is that
a) Internal and external economies
b) Internal and external economies> internal and external diseconomies
c) Internal and external economies= internal and external diseconomies
d) None of the above
Answer

Answer: c) Internal and external economies= internal and external diseconomies

QN11: Which of the following is not an external economy
a) Economies of concentration
b) Managerial economies
c) Economies of Disintegration
d) Economies of Localization
Answer

Answer: c) Economies of Disintegration

QN12: Implicit cost is
a) Cost of payments for resources bought or hired by the firm
b) Cost of self owned resources and services
c) Cost borne by the society as a whole
d) None of the above
Answer

Answer: b) Cost of self owned resources and services

QN13: Total cost is equal to
a) TC=FC+VC
b) TC=FC-VC
c) TC=VC-FC
d) TC=FC+VC/2
Answer

Answer: a) TC=FC+VC

QN14: The relationship between Average Cost Curve and Marginal Cost Curve of a firm is
a) When AC is falling, MC is falling at a much faster rate and stays below AC.
b) At lowest point of the AC curves MC becomes equal to AC
c) When AC starts rising, MC rises at a much faster rate & the MC curve is always above the AC curve
d) All the above
Answer

Answer: a) When AC is falling, MC is falling at a much faster rate and stays below AC.

QN15: Increasing returns to scale for a firm are shown graphically by
a) returns to scale have nothing to do with the shape of the long-run average cost curve
b) a horizontal long-run average cost curve
c) a vertical long-run average cost curve
d) an upward-sloping long-run average cost curve.
e) a downward-sloping long-run average cost curve
Answer

Answer: d) an upward-sloping long-run average cost curve.

QN16: When cost curves are drawn for a firm, all of the following are generally assumed EXCEPT
a) average fixed costs are constant.
b) firm is too small to influence factor prices
c) average variable cost initially declines, and then rises at higher output levels
d) total fixed costs are constant
e) marginal product of the variable factor eventually declines
Answer

Answer: a) average fixed costs are constant.

QN17: Consumer surplus
a) is the difference between what the consumer is willing to pay for all the units consumed and what he/she actually paid.
b) is the total value that a consumer receives from a purchase of a particular good
c) is a measure of the gains a consumer receives in the market
d) is the sum of the marginal values to the consumer
e) is the consumption of a commodity above and beyond the amount required by the consumer
Answer

Answer: a) is the difference between what the consumer is willing to pay for all the units consumed and what he/she actually paid.

QN18: The supply curve remains the same if there is a change in
a) the number of suppliers of the commodity
b) technology
c) the price of the good
d) the price of a commodity that is a substitute or complement in production
e) factor costs
Answer

Answer: c) the price of the good

QN19: For an inferior good, the quantity demanded
a) does not change when income rises or falls
b) rises when income falls
c) falls when income falls
d) rises when income rises
e) responds directly to changes in income
Answer

Answer: d) rises when income rises

QN20: The law of diminishing returns states that if increasing quantities of a variable factor are applied to a given quantity of fixed factors, then
a) the marginal product and the average product of the variable factor will eventually decrease.
b) total product will eventually begin to fall
c) the average product will eventually decrease with constant marginal product
d) the marginal product will eventually decrease with constant average product
e) the average product will eventually decrease, but only if total product is held constant
Answer

Answer: a) the marginal product and the average product of the variable factor will eventually decrease.

QN21: The opportunity cost of money that a firm’s owner has invested is an example of
a) implicit costs.
b) direct production costs
c) sunk costs
d) accounting costs
e) explicit costs
Answer

Answer: a) implicit costs.

QN22: In the short run, the firm’s product curves show (TP= Total Product, MP is marginal product, AP is average product)
a) TP is at its maximum when MP = O
b) TP begins to decrease when AP begins to decrease
c) when MP > AP, AP is decreasing.
d) when the MP curve cuts the AP curve from below, the AP curve begins to fall
e) AP is at its minimum when MP = AP
Answer

Answer: c) when MP > AP, AP is decreasing.

QN23: A fall in the price of raw milk used in the production of ice cream will
a) decrease the supply of ice cream, causing the supply curve of ice cream to shift to the left
b) decrease the demand for ice cream
c) increase the supply of ice cream, causing the supply curve of ice cream to shift to the right.
d) have no effect on the supply curve of ice cream but cause a downward movement along the supply curve of ice cream
e) have no effect on the supply curve of ice cream
Answer

Answer: c) increase the supply of ice cream, causing the supply curve of ice cream to shift to the right.

QN24: A monopolistically competitive firm is like a monopoly firm insofar as
a) both face perfectly elastic demand
b) both earn an economic profit in the long run.
c) both have MR curves that lie below their demand curves
d) neither is protected by high barriers to entry
Answer

Answer: b) both earn an economic profit in the long run.

QN25: A monopolistically competitive firm is like a perfectly competitive firm insofar as
a) both face perfectly elastic demand
b) both earn an economic profit in the long run
c) both have MR curves that lie below their demand curves.
d) neither is protected by high barriers to entry
Answer

Answer: c) both have MR curves that lie below their demand curves.

QN26: Product differentiation
a) means that monopolistically competitive firms can compete on quality and marketing
b) occurs when a firm makes a product that is slightly different from that of its competitors.
c) makes the firm’s demand curve downward sloping
d) All of the above answers are correct
Answer

Answer: b) occurs when a firm makes a product that is slightly different from that of its competitors.

QN27: If a collusive agreement in a duopoly maximizes the industry’s profit,
a) each firm must produce the same amount.
b) the industry level of output is efficient
c) industry marginal revenue must equal industry marginal cost at the level of total output
d) total output will be greater than without collusion
Answer

Answer: a) each firm must produce the same amount.

QN28: A firm that has a kinked demand curve assumes that, if it raises its price, ___ of its competitors will raise their prices and that, if it lowers its price, ___ of its competitors will lower their prices
a) all; all
b) none; all
c) all; none
d) none; none
Answer

Answer: a) all; all

QN29: In the dominant firm model of oligopoly, the large firm acts like
a) an oligopolist.
b) a monopolist
c) a monopolistic competitor
d) a perfect competitor
Answer

Answer: a) an oligopolist.

QN30: Limit pricing refers to
a) the fact that a monopoly firm always sets the highest price possible
b) a situation in which a firm might lower its price to keep potential competitors from entering its market.
c) how the price is determined in a kinked demand curve model of oligopoly
d) none of the above
Answer

Answer: b) a situation in which a firm might lower its price to keep potential competitors from entering its market.

QN31: If marginal product is below average product
a) The total product will fall
b) The average product will fall
c) Average variable costs will fall
d) Total revenue will fall
Answer

Answer: b) The average product will fall

QN32: The law of diminishing returns assumes
a) There are no fixed factors of production
b) There are no variable factors of production
c) Utility is maximized when marginal product falls
d) Some factors of production are fixed
Answer

Answer: c) Utility is maximized when marginal product falls

QN33: When firms collude to set prices, their individual demand curves become relatively more elastic
a) true
b) false
c) may be
d) None of the above
Answer

Answer: b) false

QN34: Oligopolists are less likely to experience price rigidity when they have excess capacity than when they are near full capacity
a) true
b) false
c) may be
d) none of the above
Answer

Answer: b) false

QN35: The resources in an economy are
a) Constantly increasing
b) Fixed at any moment
c) Constantly increasing
d) None of the above
Answer

Answer: c) Constantly increasing

QN36: Economic growths can be shown by
a) An inward shift of the production possibility frontier
b) A movement down the production possibility frontier
c) An outward shift of the production possibility frontier
d) All
Answer

Answer: c) An outward shift of the production possibility frontier

QN37: The marginal productivity theory states that under perfect competition, price of each factor of production will be
a) Equal to its marginal productivity
b) More than its marginal productivity
c) Less than its marginal productivity
d) Equal to or more than its marginal productivity
Answer

Answer: a) Equal to its marginal productivity

QN38: The factor price for the industry is determined by the point where:
a) Demand > Supply of a factor
b) Demand< Supply of a factor
c) Demand =Supply of a factor
d) None of the above
Answer

Answer: c) Demand =Supply of a factor

QN39: Which of the following is not an assumption of Marginal Productivity Theory
a) Homogeneous factors
b) Perfect Competition
c) Short-run analysis
d) Law of diminishing marginal returns
Answer

Answer: c) Short-run analysis

QN40: In order to attain the equilibrium position a firm will employ laborers up to a point where their respective
a) MRP>wage rate
b) MRP
c) MRP <=wage rate
d) MRP=wage rate
Answer

Answer: d) MRP=wage rate

QN41: The rate at which one input can be reduced per additional unit of the other input while holding output constant is measured by the
a) Marginal rate of substitution
b) Marginal rate of technical substitution.
c) Average product of the input
d) None of the given options
Answer

Answer: b) Marginal rate of technical substitution.

QN42: All of the following are determinants of supply except
a) Price
b) Income levels
c) objectives of the firm
d) Level of technology
Answer

Answer: b) Income levels

QN43: Demand function is given as Dx=f(Px, Pr,Y,T) What does T stand for
a) Taxes
b) Tastes
c) Both Taxes and Tastes
d) None
Answer

Answer: b) Tastes

QN44: What kind of relationship exist between demand for a good and price of its substitute goods
a) Direct
b) Inverse
c) No effect
d) Can be direct or inverse
Answer

Answer: a) Direct

QN45: What kind of relationship exist between demand for a good and price of its complementary goods
a) Direct
b) Inverse
c) No effect
d) Can be direct or inverse
Answer

Answer: b) Inverse

QN46: Degree of responsiveness of demand to a change in any of its determinants is called
a) Elasticity of demand
b) Law of demand
c) Law of supply
d) Elasticity of supply
Answer

Answer: b) Law of demand

QN47: ___tells us about the, ‘direction’ of change in demand in response to a change in any of its determinants; it, however does not tells us anything about the ‘magnitude’ of change
a) Law of demand
b) Demand function
c) Both
d) None
Answer

Answer: b) Demand function

QN48: The value of elasticity coefficient varies between zero and ___
a) Infinity
b) one
c) Both
d) None
Answer

Answer: a) Infinity

QN49: Elasticity of supply is defined as the ___of percentage change in quantity supplied and the percentage change in the price of the commodity
a) Ratio
b) Addition
c) Multiplication
d) None of the above
Answer

Answer: a) Ratio

QN50: Perishable goods cannot store and thus, entire stock of such goods must be disposed of within very short period, whatever may be price. Hence the nature of supply of such goods is –
a) Elastic
b) inelastic
c) unitary elastic
d) none
Answer

Answer: b) inelastic

QN51: In Marginal utility theory, utility is an
a) Ordinal concept
b) Cardinal concept
c) Both ordinal and cardinal concept
d) None of the above
Answer

Answer: b) Cardinal concept

QN52: MU of the commodity becomes negative when TU of the commodity is
a) Rising
b) Constant
c) Falling
d) zero
Answer

Answer: c) Falling

QN53: Falling MU shows which law
(a) Law of diminishing returns
(b) Law of diminishing marginal rate of substitution
(c) Law of diminishing marginal utility
(d) None of the above
Answer

Answer: (c) Law of diminishing marginal utility

QN54: Slope of TU curve is called
a) rginal utility
(b) Utility
(c) Average utility
(d) None
Answer

Answer: a) rginal utility

QN55: Indifference mean
a) X is preferred to Y
(b)Y is preferred to X
c) X and Y are equally preferred
(d) None
Answer

Answer: c) X and Y are equally preferred

QN56: Higher Indifference curve means
(a) Consumer has more income
(b) Price of goods have reduced
(c) Higher utility level
(d) All of the above
Answer

Answer: (c) Higher utility level

QN57: MRS is given by
a) ? X/ ? Y
b) ? X- ? Y
c) ? Y/ ? X
d) ? Y- ? X
Answer

Answer: c) ? Y/ ? X

QN58: When tax is raised, consumer surplus
a) Falls
b) Rises
b) Remain unchanged
d) Becomes Zero
Answer

Answer: a) Falls

QN59: Consumer surplus is the difference between
a) amount consumer is willing to pay minus amount actually paid by the consumer
b) Amount consumer actually paid minus the amount consumer is willing to pay
c) Amount consumer actually paid minus the amount charged by the seller
d) Amount consumer is willing to pay minus the amount producer is wanting
Answer

Answer: a) amount consumer is willing to pay minus amount actually paid by the consumer

QN60: The common assumption of marginal utility and indifference curve theories is
a) Consistency
b) Transitivity
c) Rationality
d) More is better
Answer

Answer: c) Rationality

QN61: Factors of production can be
a) Land
b) Labour
c) Organisation
d) All of the above
Answer

Answer: d) All of the above

QN62: Production function means
a) Physical relationship between inputs used and output
b) Technical relationship between inputs used and output
c) Financial relationship between inputs used and output
d) Both physical and technical relationship between inputs used and output
Answer

Answer: d) Both physical and technical relationship between inputs used and output

QN63: Short -run production function means
a) At least one factor is in fixed supply
b) Two factor are in fixed supply
c) All factors are in fixed supply
d) One factor is in variable supply
Answer

Answer: a) At least one factor is in fixed supply

QN64: Law of variable proportion holds when
a) State of technology is same
b) All units of variable factor are homogeneous
c) There is at least one fixed factor
d) All of the above
Answer

Answer: d) All of the above

QN65: Returns to scale occur
a) In the long-run
b) When all inputs are increased
c) When the increase in inputs is in the same proportion
d) All of the above
Answer

Answer: d) All of the above

QN66: Cost of next best alternatives opportunity given up is called
a) Outlay cost
b) Opportunity cost
c) Explicit Cost
d) Implicit Cost
Answer

Answer: b) Opportunity cost

QN67: Fixed cost is also called
a) Sunk cost
b) Supplementary cost
c) Overhead Cost
d) All of the above
Answer

Answer: d) All of the above

QN68: MC curve is ___ shaped
a) L-shaped
b) Straight line
c) U -shaped
d) Inverse S-shaped
Answer

Answer: c) U -shaped

QN69: Long-run AC curve is also called
a) Planning curve
b) Envelop curve
c) Cost frontier
d) All of the above
Answer

Answer: d) All of the above

QN70: Total cost at zero level of output will be= ___
a) TFC
b) TVC
c) AC
d) AFC
Answer

Answer: a) TFC

QN71: Homogenous product exists under
a) Perfect Competition
b) Monopoly
c) Monopolistic Competition
d) All of the above
Answer

Answer: a) Perfect Competition

QN72: One seller exists under
a) Perfect Competition
b) Monopoly
c) Monopolistic Competition
d) All of the above
Answer

Answer: b) Monopoly

QN73: Monopolistic competition means
e) Large number of sellers
b) Product differentiation
c) Free entry and exit of firms
d) all of the above
Answer

Answer: d) all of the above

QN74: Homogenous product means product are
a) Perfect substitutes
b) Identical
c) Cross elasticity between products is infinity
d) All of the above
Answer

Answer: d) All of the above

QN75: Discriminating monopoly means
a) Different prices are charged
b) Consumers might be same or different
c) Commodity is same
d) All of the above
Answer

Answer: d) All of the above

QN76: What brings about pure competition
a) Large number of buyers and sellers
b) Homogenous product
c) Free entry and exit of firms
d) All of the above
Answer

Answer: d) All of the above

QN77: Who coined the term monopolistic competition
a) Chamberlin
b) Joan Robinson
c) Robbins
d) Marshall
Answer

Answer: a) Chamberlin

QN78: What is the basic principle of all market conditions
a) A firm should produce only if TR>TC
b) To maximise profit, firm must produce where MR=MC
c) Slope of MC should be more than slope of MR
d) All of the above
Answer

Answer: d) All of the above

QN79: In economics, ___measures the payments that flow between any individual country and all other countries
(a) Exchange Rate
(b) BOP
(c)Both of the above
Answer

Answer: (b) BOP

QN80: A term commonly used to refer to a central banks operations which mitigates the two potentially undesirable effects of inbound capital (currency appreciation and inflation) is-
(a) Sterilisation
(b) Open market operations
(c) Exchange Rate
(d) none
Answer

Answer: (a) Sterilisation

QN81: Average product is defined as–
a) Total cost divided by the total units of input
b) Total output divided by the total units of input
c) Total cost divided by total output
d) Total output divided by total cost of input
Answer

Answer: b) Total output divided by the total units of input

QN82: To manufacture a PC, you require a keyboard and a monitor. If you measure keyboard on the X-axis and monitor on the Y-axis, the shape of the Isoquant will be–
a) Convex to the origin
b) Concave to the origin
c) Downward sloping straight line
d) Upward sloping straight line
e) L-shaped
Answer

Answer: d) Upward sloping straight line

QN83: The intersection of marginal product curve and average product curve characterizes the point of–
a) Maximum profit
b) Maximum total product
c) Maximum average product
d) Maximum marginal product
Answer

Answer: c) Maximum average product

QN84: The average total cost will be minimum at a point where–
a) Marginal cost and average fixed cost curves intersect
b) Marginal cost and average variable cost curves intersect
c) Marginal cost and average cost curves intersect
d) Marginal cost is minimum
Answer

Answer: c) Marginal cost and average cost curves intersect

QN85: Average fixed cost–
a) Always declines as the output increases
b) Is U-shaped, if there are increasing returns to scale
c) Is U-shaped, if there are decreasing returns to scale
d) Is intersected by marginal cost at its minimum point
e) None of the above
Answer

Answer: a) Always declines as the output increases

QN86: Which of the following cost curves is also called planning curve
a) Long run total cost curve
b) Long run average cost curve
c) Long run marginal cost curve
d) Total fixed cost curve
Answer

Answer: b) Long run average cost curve

QN87: Economic profit is–
a) Accounting profit + Implicit cost
b) Accounting profit + Implicit cost+ Explicit cost
c) Accounting profit – Implicit cost
d) Accounting profit -Indirect costs
Answer

Answer: c) Accounting profit – Implicit cost

QN88: The intersection of the marginal cost curve and the average cost curve characterizes the point of–
a) Maximum profit
b) Minimum average cost
c) Minimum marginal cost
d) Minimum opportunity cost
Answer

Answer: b) Minimum average cost

QN89: Which of the following costs remain constant as the output increases
a) Marginal cost
b) Average variable cost
c) Average fixed cost
d) Total variable cost
e) None of the above
Answer

Answer: e) None of the above

QN90: Increasing marginal costs with increase of output implies–
a) Decreasing average returns
b) Decreasing average fixed costs
c) Decreasing average variable costs
d) Decreasing total costs
Answer

Answer: b) Decreasing average fixed costs

QN91: Which of the following cost curves is not ‘U’ shaped
a) Long run average cost curve
b) Long run marginal cost curve
c) Short run average cost curve
d) Average variable cost curve
e) Average fixed cost curve
Answer

Answer: e) Average fixed cost curve

QN92: What would be the shape of the total cost curve when a manufacturing unit is experiencing economies of scale
a) Upward sloping
b) Rectangular hyperbola
c) U-shaped
d) Inverted U-shaped
Answer

Answer: a) Upward sloping

QN93: In perfect competition, a firm maximizing its profit will set its output at that level where–
a) Average variable cost = price
b) Marginal cost= price
c) Fixed cost= price
d) Average fixed cost= price
Answer

Answer: b) Marginal cost= price

QN94: It is advisable for a firm operating under perfect competition to shut down in the short run when the price of the product falls below the–
a) Total cost
b) Fixed cost
c) Average variable cost
d) Semi-fixed cost
Answer

Answer: c) Average variable cost

QN95: In the long run, a perfectly competitive firm earns only normal profits because of —
a) Product homogeneity in the industry
b) Larger number of sellers and buyers in the industry
c) Free entry and exit of firms in the industry
d) Both (a) and (b) above
Answer

Answer: c) Free entry and exit of firms in the industry

QN96: The doctrine of invisible-hand applies to economies in which all the markets are–
a) Demand specific
b) Supply specific
c) Imperfectly competitive
d) Perfectly competitive
Answer

Answer: d) Perfectly competitive

QN97: The horizontal demand curve for a firm is one of the characteristic features of-
a) Oligopoly
b) Monopoly
c) Monopolistic competition
d) Perfect competition
Answer

Answer: d) Perfect competition

QN98: A perfectly competitive firm can increase its sales revenue by–
a) Reducing the price
b) Increasing the price
c) Increasing the production
d) Increasing the expenditure on advertising
Answer

Answer: c) Increasing the production

QN99: If a perfectly competitive industry is an increasing cost industry, the demand curve faced by a firm will be–
a) Upward sloping
b) Downward sloping
c) A horizontal straight line
d) A vertical straight line
Answer

Answer: c) A horizontal straight line

QN100: A perfectly competitive firm earns abnormal profits when its–
a) Average cost curve lies above its demand curve
b) Average revenue curve is tangent to average cost curve
c) Demand curve lies above the average cost curve
d) Marginal revenue curve lies above the average cost curve
e) Both (c) and (d) above.
(Note: A perfectly competitive firm earns abnormal profits when its demand curve and marginal revenue curve lies above the average cost curve as the demand curve and marginal revenue curve is the same for a perfectly competitive firm. Answer (c) and (d) above, a perfectly competitive firm earns abnormal profits)
Answer

Answer: e) Both (c) and (d) above.

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